FMI, a provider of management consulting and investment banking to the engineering and construction industry, says in its Q3-2013 Construction Outlook that market sectors will continue to shift through the rest of 2013, reducing annual construction-put-place predictions (CPIP) to $909.6 billion, down nearly $4 billion from previous predictions. Early forecasts for 2014 show annual CPIP will experience moderate growth of 7%, rising to $977 billion.
Major market predictions in the Q3-2013 Construction Outlook for next year include:
• Residential construction — FMI continues to forecast traction in residential construction. However, the growth is expected to taper off to 12% in 2014. Total predicted residential forecast is $379.6 billion, compared with the $338.2 billion for 2013.
• Commercial construction — The current forecast calls for a 5% increase in 2014. Although retail sales as of June were up 5.7% over the previous year, new bricks-and-mortar retail space, along with commercial other construction growth, will remain slow to recover.
• Health care —With business owners nervous about the costs of the Affordable Healthcare Act, predictions are slightly unstable. Although the health care construction forecast slipped 1% since last year, it is still expected to grow 6% in 2014 to $44 billion.
• Educational facilities — The increase in residential construction and tax revenues will help bring this market back in many areas of the country. Due to budget cuts for government spending at all levels, the national market will rise only slightly in 2014 to 4% over 2013 levels.
• Manufacturing — The resurgence of the automotive industry is a big boost to manufacturing as is the continuing exploration and mining for shale oil and gas. However, manufacturing construction is expected to drop 2% by year-end 2013 before returning to 4% growth in 2014.
• Highways and streets — Passage of MAP-21 calls for nearly $38 billion for the fiscal year 2014 for the Federal-Aid Highway Program. This is a major contributor to the CPIP predications of nearly $80 billion for 2014.
While there is no singular reason for the changes in these markets, there are a few economic concerns that touch all of them:
• Potential conflict with Syria
• Downsizing of government and large companies
• Implementation of Affordable Healthcare Act.